Don't Let Your Ex's Tax Debt Drag You Down

The problem: A woman's ex-husband had claimed illegal tax shelters on investments during their marriage and grossly underpaid the taxes owed. She had signed a joint return during the years she was married; then the IRS demanded she pay up.

A stockbroker and single mother of two living in New York City, this woman says she knew nothing about American tax laws when she married in 1979. She was 23, a recent college graduate from Canada with a degree in English literature.

But when a couple files a joint return (as most married couples do), both husband and wife are responsible for any underpayment or errors. Frequently, the IRS goes after the spouse who is easier to track down or collect from. And more often than not, that's the person who didn't perform the fancy financial footwork.

A woman's problem

"Often the husband was beyond the reach of the tax collector," said Mark Luscombe, the principal federal tax analyst in Riverwoods, Ill. "He'd been sentenced to prison, declared bankruptcy or gone underground.''

It's been a nightmare for thousands of divorced or separated women, and each story is somehow sadder than the last. If they're working, the IRS garnishees their wages. If they remarry, their new husbands are slapped with the lien.

 

"Many were forced to sign returns at the hands of an abusive husband," this woman says. "Some of their signatures were forged. Even so, these women are still hounded by the IRS."

Called "innocent spouses" by the IRS, these women once had little recourse. But the good news is that things are changing.

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